FOREX: GBP Extends Post-BoE Strength; CAD Jobs Report the Data Highlight
Aug-08 09:33
- GBP has extended the spell of post-BoE decision strength. GBP/USD edged to a new recovery high overnight at 1.3453, signalling markets are still buying into the view that the split vote yesterday has restricted the room with which the BoE can cut rates later this year. For now, S/T momentum is still pointed higher, with the Jul 24 high of 1.3589 the next notable upside level.
- Canada's July jobs report is due Friday, and with markets expecting job gains to slow sharply to +10k from +83.1k previously, the unemployment rate is seen ticking moderately higher. Ahead of the print, USD/CAD is holding toward the lower-end of the weekly range, with yesterday's 1.3722 low and the 1.3692 50-dma the next notable downside levels.
- JPY is among the poorest performers on the day. Speculation continues to mount over the future of the LDP leadership. Speaking today, Ishiba noted he is not intending to change the cabinet lineup for now, but has vowed to stay on in his role despite party pressure to accelerate succession. Conviction in the weaker is low, however, with volumes holding below the average for this time of day.
- BoE's Pill and Fed's Musalem are the sole central bank speakers. Speculation remains over the possible make-up of the FOMC into 2026, with CEA head Miran set to step in for the remainder of Kugler's term, while reports earlier in the week suggested current FOMC member Waller was being pushed to take over from Powell next year. Any further reports or headlines here will be carefully watched by markets.
- Today also marks the supposed expiry of Trump's deadline by which Moscow must strike a ceasefire with Ukraine to avoid secondary tariffs. Presumably the week's developments and potential meeting with Putin as early as next week will prompt relief here, but further White House commentary on this topic will be carefully watched.
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MNI: mni: boe says financial stability risks remain elevated
Jul-09 09:30
- MNI: BOE SAYS FINANCIAL STABILITY RISKS REMAIN ELEVATED
- BOE: UK BANK SYSTEM REMAINS IN STRONG POSITION
UK: BOE: Financial Stability risks still elevated - FPC
Jul-09 09:30
Risks and uncertainty from geopolitical tensions and global fragmentation of trade remain elevated, the Bank of England's latest Financial Stability Report notes, with pressures on sovereign debt markets also still high.
Although some risks have crystalised, material uncertainty remains for the global macroeconomic outlook. With its large open financial sector, these risks are "particularly relevant to the UK," the FSR notes.
- However, UK consumer and corporate borrowers remain resilient and the banking system remains in a strong position to support households and businesses if we see a downturn worse than expected.
- Risks remain from continued high valuation of global asset prices
- Banks' CET 1 ratio was 14.4% in Q1, with liquidity cover at 153%
- The Financial Policy Committee maintained the countercyclical capital buffer (CCyB) rate at 2%, with relevant risk indicators not materially above long-term averages, with the FPC adding it stood ready to raise the CCyB if necessary.
- Despite a period of high volatility and transactional volumes, operational resilience in core government bond and repo markets was sustained through Q2.
- Gilt repo discussion paper to be published by BOE 'soon'
